MANAGING

OPERATIONS
MODULE

18b - 1
COPYRIGHT © 2016 PEARSON EDUCATION, INC.
 THE ROLE OF OPERATIONS
MANAGEMENT
Operations Management – the transformation
process that converts resources into finished
goods and services.

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 2

 EXHIBIT MO-1
THE OPERATIONS SYSTEM

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 3

 SERVICES AND MANUFACTURING

 Manufacturing organizations – organizations

that produce physical goods.
• Service organizations – organizations that
produce nonphysical products in the form of
services.

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 4

 WHAT IS VALUE CHAIN MANAGEMENT
AND WHY IS IT IMPORTANT?
 Value – the performance characteristics,
features, attributes, and any other aspects of
goods and services for which customers are
willing to give up resources.
• Value chain – the entire series of
organizational work activities that add value at
each step from raw materials to finished
product.

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 5

 WHAT IS VALUE CHAIN MANAGEMENT
AND WHY IS IT IMPORTANT? (CONT.)
• Value chain management – the process of
managing the sequence of activities and
information along the entire value chain.
• Organizational processes – the ways that
organizational work is done.

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 6

 VALUE CHAIN MANAGEMENT

Requirements for Value Chain Management

- A new business model incorporating:
• Coordination and collaboration
• Investment in information technology
• Changes in organizational processes
• Committed leadership
• Flexible jobs and adaptable, capable employees
• A supportive organizational culture and attitudes

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 7

 EXHIBIT MO-2
VALUE CHAIN STRATEGY REQUIREMENT

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 8

 OBSTACLES TO VALUE CHAIN
MANAGEMENT
- Organizational barriers
• Reluctance to shake up the status quo
• Security issues
– Cultural attitudes
• Lack of trust and too much trust
• Fear of loss of decision-making power
– Required capabilities
• Lacking or failing to develop the requisite value chain
management skills

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 9

 OBSTACLES TO VALUE CHAIN
MANAGEMENT (CONT.)
People:
• Lacking commitment to do whatever it takes
• Refusing to be flexible in meeting the demands of
a changing situation
• Not being motivated to perform at a high level
• Lack of trained managers to lead value chain
initiatives

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 10

 EXHIBIT MO-3
OBSTACLES TO VALUE CHAIN
MANAGEMENT

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 11

 OBSTACLES TO VALUE CHAIN
MANAGEMENT (CONT.)
Intellectual property – proprietary information
that’s critical to an organization’s efficient and
effective functioning and competitiveness.

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 12

 CURRENT ISSUES IN MANAGING
OPERATIONS
Technology’s Role in Manufacturing
– Increased automation and integration of
production facilities with business systems to
control costs.
• Predictive maintenance, remote diagnostics, and
utility cost savings
• Quality – the ability of a product or service to
reliably do what it’s supposed to do and to
satisfy customer expectations.

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 13

 CURRENT ISSUES IN
MANAGING OPERATIONS
Quality Initiatives

– Planning for quality

– Organizing and leading for quality
– Controlling for quality

COPYRIGHT © 2016 PEARSON EDUCATION, INC. 18b - 14

 QUALITY GOALS

ISO 9000 – a series of international quality

management standards that set uniform
guidelines for processes to ensure that products
conform to customer requirements.
• Six Sigma – a quality program designed to
reduce defects, help lower costs, save time, and
improve customer satisfaction.

18b - 15
COPYRIGHT © 2016 PEARSON EDUCATION, INC.
 MASS CUSTOMIZATION AND
LEAN ORGANIZATION
Mass customization – providing customers
with a product when, where, and how they want
it.
• Lean organization – an organization that
understands what customers want, identifies
customer value by analyzing all activities
required to produce products, and then
optimizes the entire process from the customer’s
perspective.

18b - 16
COPYRIGHT © 2016 PEARSON EDUCATION, INC.
COPYRIGHT © 2016 BY PEARSON
EDUCATION, INC. 18b - 17